NYC Bonds

One Billion BARBs

On July 17, the New York City Transitional Finance Authority sold $1 billion of Building Aid Revenue Bonds – the third billion-dollar TFA BARB sale in just over a year. The transaction consisted of $500 million of tax-exempt new money bonds, $429 million of tax-exempt refunding bonds, and $114 million of taxable refunding bonds. Ramirez & Co. served as book-running manager on the deal, which received $702 million of orders from individual investors and professionally-managed accounts. After restructuring several maturities, the TFA received $513 million in orders from institutional investors. Given the strong investor demand for the 2028, 2029, and 2030 maturities with an optional call in 2021, TFA reduced yields for these maturities by three basis points during the institutional re-pricing. The taxable bonds sold via competitive sale received nine bids, with Citigroup winning at a true interest cost of 3.123%. As a combination of new money and refunding, the transaction will fund education-related capital projects and refinance existing debt at lower interest rates, saving over $120 million.  Read the full press release.

 Institutional Investors Help Make TFA FTS Sale a Success

The New York City Transitional Finance Authority sold $1.15 billion of Future Tax Secured tax-exempt and taxable new money bonds on July 25. J.P. Morgan served as senior book-running manager, with Rice Financial Products Company serving as joint lead manager. Individual investors and professionally-managed accounts placed $116 million of orders for the bonds and institutional investors submitted $2.1 billion of orders. Final bond yields ranged from 1.63% in the 2020 maturity to 3.68% in the 2043 maturity for a 3.5% coupon bond. TFA sold two tranches of taxable bonds via competitive sale and received nine and eight bidders each, with Goldman Sachs & Co. and Barclays Capital each winning a tranche, respectively. Proceeds from the sale will fund capital projects throughout the City. Read the full press release.

NYC Bond Fact – Bright Lights, Big City

1797 map of New York City, (surveyed by Benjamin Taylor, engraved by John Roberts; from the New York Public Library’s Digital Collections).

New York City has been the most populous city in the United States since 1790, when the first United States Census counted 33,131 people. The population grew steadily to nearly 7.9 million in the mid-20^th century. After declining to under 7.1 million residents by 1980, the City returned to growth and has continued its upward climb to over 8.6 million people in 2017. The current count makes it larger than the combined population of Los Angeles and Chicago, the next most populous cities in the U.S., and our borrowing reflects our size. Combining the City’s General Obligation bonds with the Transitional Finance Authority’s bonds, New York City was the largest issuer by volume in 2017. The City borrows only for projects with a useful life of five years or more and that have been approved through the Capital Budget process. The City’s General Obligation bonds carry ratings of AA/Aa2 and the Transitional Finance Authority’s Future Tax Secured bonds are rated AAA/Aaa.

Looking Ahead

New York City issuers have another full calendar in August. The City is offering $871 million of General Obligation bonds this week via negotiated and competitive sales. The transaction consists of $770 million of tax-exempt refunding bonds and $60 million of taxable refunding bonds, as well as $41 million of tax-exempt bonds to convert outstanding floating rate bonds to fixed rate. The New York City Municipal Water Finance Authority plans to offer tax-exempt revenue bonds the week of August 13. Additional details will be announced when available. Sign up to receive notices of upcoming sales here.

Retirement

After close to 12 years as Deputy Comptroller for Public Finance, serving under three elected Comptrollers, I am retiring from City government on August 31.  It’s been a fascinating and rewarding time. We’ve sold over $110 billion of debt, through established and new credits and a wide range of debt instruments.  In this time, the City successfully navigated challenging markets and economic cycles to maintain excellent ratings and consistent investor support. We’ve worked hard to make sure our bond disclosure covers emerging issues in depth and to provide strong investor communications and data through the Comptroller’s website. We’ve supported individual investors through retail order periods, syndicate rules and financing practices. Fulfilling a Comptroller priority, we’ve greatly increased the role of MWBE firms in the City’s bond business – underwriters, financial advisors and counsel – giving us access to a talent pool that will serve the City in years to come.  I’m especially proud of our Public Finance team, a small but exceptionally smart, knowledgeable and dedicated group that will continue to serve the City and our investors and taxpayers with integrity and professionalism.  I am grateful for the opportunity to have worked for New York City and in collaboration with many outstanding individuals in government and the municipal bond community.

Carol S. Kostik
Deputy Comptroller for Public Finance